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Australian mining key risks: costs control, productivity and social license

Australian mining key risks

Sixty six percent of global miners confident/very confident on sector growth outlook.

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Change is the only certainty for today’s Australian mining industry, according to the results of the KPMG Australian Mining Risk Forecast released today as part of the firm’s annual global report, Risks and opportunities for mining – Outlook 2019.

The KPMG Report provides key perspectives on the top ten risks as rated by global mining leaders - and also the sector opportunities. As part of the firm’s analysis, consideration was given to risks that may be applicable to Australian mining organisations with assets operating in Australia or abroad. According to the responses, the top three areas of focus locally are:

  • Controlling operating costs
  • Productivity
  • Stakeholder relations and social license to operate

“These risks speak to both the organic growth and productivity focus and also the broader landscape involving stakeholders and social license. Interestingly, access to key talent was also listed as a key concern for the future, moving in to the top ten,” said Trevor Hart KPMG Global Mining Leader”

Mr Hart said that, at the same time, organisations in the sector were confident about growth and indeed actively seeking future growth strategies.

“On the opportunistic side, a majority of global miners said they are looking for growth opportunities via organic means, through innovation and disruption, and M&A,” he said. “The results point to a dynamic and confident outlook for the mining sector in the next twelve months both in Australia and overseas.”

Mr Hart said the KPMG Mining survey was conducted during late 2018 - a year of growing uncertainty combined with strong growth potential for the mining industry.

“To name just two examples, the risk of a trade war- and slowing rates of growth - remains a point of concern for global markets, while strong fundamentals for base metals continue to be driven by infrastructure development and rapid growth in areas such as renewable energy and electric vehicles,” he said. “However, we encourage miners to help support growth and sustainability through the adoption of innovative technologies designed to better manage costs.”

KPMG said some of the ways this was occurring was through improved extraction methods, streamlining distribution, increasing worker productivity, and mitigating risks by building new partnerships and attracting the right talent.

“Both globally and locally mining leaders must manage in a more complex and fast moving landscape,” said Trevor Hart KPMG Global Mining Leader and also head of KPMG Mining in Australia. “Along with the traditional risks of the sector, such as commodity price and access to reserves, we now see new and growing threats involving digital disruption, emergence of non-traditional minerals into the market, access to water and energy, health and safety issues, climate change. The KPMG mining survey shows these play a critical and mainstream role in the risk landscape.”

“In every case, the proper strategic response to risk can be an opportunity to create value for mining companies. For example, 73 percent of respondents see technological disruption as more of an opportunity than a threat. We also see increasing collaboration between mining leaders as another important strategy that will be key to ensuring a successful and sustainable future for the mining industry both in Australia and globally.”
 

About the KPMG Global Risks and opportunities for Mining Outlook 2019 report

Every year, KPMG asks mining executives about the state of their industry, key trends, and their expectations for their organisations. This year, we expanded the survey to capture key global market trends, backed by responses from over 130 executives and industry highlights from Canada, Australia, Brazil and South Africa.

For further information

Marjorie Johnston
KPMG Communications
+ 614 07 329 430
mjohnston4@kpmg.com.au
 

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